Research also reveals why being self-employed today makes it more difficult to be approved for a mortgage
More than three quarters, or 77%, of self-employed people are not confident about their prospects of getting a mortgage, results of the latest Pepper Money Specialist Lending Study have shown.
The research, commissioned by Pepper Money and conducted by YouGov among more than 6,000 adults, found that a majority feels that being self-employed makes it more difficult to be approved for a mortgage.
Pepper Money said that one challenge for the self-employed is that many mortgage lenders base the affordability of a mortgage on the average of the last three year’s profit. However, with COVID-19 impacting most industries in 2020, businesses have made significant profits only in the last of the past three years.
This was confirmed in the Pepper Money Study, which reported that around 20% of self-employed people said that their business made over 10% more profit in the last year than the previous two years.
“The self-employed play a vital role in the country’s economy and the respondents to the survey are largely correct in that it can sometimes be more difficult to secure a mortgage as a self-employed person,” Paul Adams (pictured), sales director at Pepper Money, said. “But it doesn’t have to be that way.
Read more: How to get a mortgage for self employed clients
“There are many lenders, like Pepper Money, that specialise in lending to self-employed customers, with criteria and processes that are designed to meet the particular circumstances of self-employment, including the ability to lend on the most recent year’s figures, which can make an important difference in helping the self-employed achieve the loan size they deserve.”
Adams added that it is not just the self-employed who can benefit from this specialist approach.
“Our research found that a quarter of all workers earn variable income, either from overtime or bonuses, and the ability to consider this additional income is often an important factor in helping them to achieve the mortgage they deserve,” he said.
